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Thursday, March 14, 2013

Good and Bad credit!

Normally, if you are in debt, you are not rich. This is the fact. The intention here is precisely to have no debt and enough money aside to buy what you want. In looking more closely, there are basically two types of debt, good debt and bad, as there are good and bad cholesterol, good and bad stress etc.
A bad debt is a loan you take out for something that does not earn you money: a loan for your car, your home, your plasma screen etc. Because these assets do not generate money and you need to repay your credit from your pocket.

Most of the Rich people who are well aware of credit traps pay cash for these things instead of getting a bad debt.
A good debt, you'll understand a credit contracted for a asset that generate income for your investment. For example, if you pay the monthly installments on your house rented and you are receiving the rent paid by your tenant, or the loan you take out to start a company will be repaid from profits. You do not take money out of your pocket to pay for a good debt.
However, there are exceptions in the case of bad debt.

When the rate of your credit is less than the rate of inflation, for example in the case of a zero-interest loan, it is better to credit. This is also the case when you put the money you were going to spend on your purchase that brings you more than the cost of credit that you will incur to complete this purchase. Now a day mortgage rates are low, you can benefited through that also.